Page 12 - Chap21 Offences & Penalties

Discussion & Conclusion:- In the given case,
1) If Comet Chem. - owner of goods - comes forward for the payment of penalty, penalty payable
under section 129 of CGST Act is 200% of the tax payable on such goods, i.e., 200% of (₹ 80,000 ×
9%)] = ₹ 14,400.
2) If Comet Chem. - owner of goods - does not come forward for the payment of penalty, penalty

payable under section 129 of CGST Act is ₹ 40,000 which is higher of:-
Ø 50% of value of goods, i.e., ₹ 40,000 (50% of ₹ 80,000) or
Ø 200% of tax payable on such goods, i.e., ₹ 14,400 [200% of (₹ 80,000 × 9%)].
Author’s Note:- If Q ask you penalty as per IGST Act, Penalty is double of the penalty payable u/s 129

of CGST Act because penalty leviable under IGST Act is the sum total of penalty leviable under CGST
Act & SGST/UTGST Act.

CCP 21.04.11.00

Adinath Private Limited, registered under GST in the State of Uttar Pradesh, instructed Ashok
Transporters to deliver certain taxable goods to Mahavir Enterprises in Uttar Pradesh on 10th
January, 20XX. The value of the goods is ₹ 6,80,000 which are chargeable to CGST & SGST@ 9%
each. While the goods were in transit, proper officer intercepted the goods and the truck in which

goods were being transported, under section 68.
However, the driver of the truck failed to tender any document in relation to the goods in
movement. The proper officer, after conducting the physical verification of the goods and the truck,
decided to seize the goods and the truck and issued a notice under section 129(3) specifying the
penalty payable by Adinath Private Limited after giving it an opportunity of being heard.

You are required to determine the amount of penalty payable under CGST Act if Adinath
Private Limited does not come forward for the payment of penalty.
Further, discuss the suitable course of action for Ashok Transporters if it intends to get its truck

released. [CA Final RTP Nov 22] [CA Final MTP Sep 23][CA Final MTP Mar 24 ]
Answer :-
Legal Provision:-
Ü As per section 129(1)(b) of CGST Act, if the owner of goods does not come forward for the payment of
penalty, detained/seized goods and conveyance (used as a means of transport for carrying said goods)

and related documents are released on payment of penalty equal to higher of following:-
i) 50% of value of goods or
ii) 200% of the tax payable on such goods.
Ü As per first proviso to section 129(6), transporter can get the conveyance released on payment of

penalty as mentioned in the order or ₹ 1 lakh, whichever is less.
Discussion & Conclusion:-
Ü In given case, if Adinath Private Limited failed to come forward for the payment of penalty, the penalty
payable under the CGST Act is ₹ 3,40,000 which is higher of the following:-

i) 50% of value of goods i.e. (50% of ₹ 6,80,000) = ₹ 3,40,000 or
ii) 200% of the tax payable on such goods i.e. (200% of ₹ 6,80,000 × 9%) = ₹ 1,22,400.
Ü Further, the transporter of goods can get its truck released upon payment of ₹ 1,00,000 which is the
lower of the following under CGST Act:-

i) Penalty as mentioned in the order [₹ 3,40,000] or
ii) ₹ 1,00,000.

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